My loyal readers are aware of my general negative position on the U.S. dollar. In a nutshell, I believe higher interest rates will eventually make it difficult for U.S. governments to satisfy their debts, causing foreign U.S. bond creditors to eventually shy away from U.S. dollars.

With the U.S. dollar the official "reserve" of about 70% of world currencies, a lack of confidence in the U.S. dollar could result in a "run away" from the currency.

In time, the remainder of the world will come to question the value of a currency issued on printing presses from a Federal Government saddled with debt it may find difficult to satisfy under a higher interest rate environment. Raise taxes to pay off government debt? And cut off the spending of the U.S. consumer... I don't think so.

The economic and emotional factors I'm speaking about above will take time to filter through world economies, especially if gold stays below the $500 an ounce level.

But in the immediate term, I expect to see a "run to" U.S. dollars for the following reasons:

-- Bonds just continue to get hammered. Yesterday, they were down big-time. Investors are fleeing the bond market because they are concerned higher interest rates will push bond prices lower.

-- Big-cap stocks just can't get going. If you look at the past few months of trading, you will quickly note the DOW is in a trading pattern. The indicators I follow show there is no urgency to sell stocks, but light volume indicates no big hurry to buy either. With higher rates set to put a damper on corporate earnings, I believe investors are more likely to leave the stock market than get into stocks.

Will the exiting bond investors buy stocks? No. Will the exiting stock buyers buy bonds? No. And both "nos" are for the same reason -- higher interest rates will push both markets down.

So where is the money running to? The money is going to short-term U.S. dollar instruments, like T-bills and CDs. And until the interest rate fears are fully discounted by the market, we could see cash just sitting in short-term U.S. securities. Right now, half of the analysts I follow expect the Fed to raise rates a quarter-point at its next meeting, the other half expects a half-point increase. The futures market tells me a full- percentage-point increase in rates is already built-in.

What does a higher immediate-term U.S. dollar mean for you? If you are American, and plan to travel this summer, you may find your money will go further in foreign countries than it has in the recent past. If you're looking to diversify outside U.S. dollars because you have the same long-term concerns about the U.S. dollar that I have, and you want to hedge against the eventual demise of the U.S. dollar, this summer may also be a good time to get into foreign currencies while the American dollar is strong. I'll keep you posted.